HA Sustainable Infrastructure Capital (HASI) risk factors, FY2025 10-K

Risks Related to Our Business and Our Industry

1. 01If the cost of energy generated by traditional sources of energy declines from present levels, demand for the projects in which we invest may decline
2. 02If the market for various types of climate solutions projects or the investment techniques related to such projects do not develop as we anticipate, new business generation in this target area may be adversely impacted
3. 03Some projects in which we invest rely on net metering and related policies to improve project economics which if reduced could impact repayment of our investments or the return on our assets
4. 04We are subject to risks related to our sustainability and governance activities and disclosures34% rewritten
5. 05We operate in a competitive market, which may impact the terms of our investments
6. 06Our business is influenced by and depends in part on U.S. federal, state and local government laws, regulations and policies, and changes in such laws, regulations or policies, or a decline in the level of government support could adversely affect our business
7. 07U.S. federal, state and local government entities are major participants in, and regulators of, the energy industry, and their actions could be adverse to our project companies or our Company
8. 08A change in the fiscal health, level of appropriations or budgets of U.S. federal, state and local governments could reduce demand for our investments27% rewritten

Risks Related to Our Assets and Projects in Which We Invest

1. 09Changes in interest rates could adversely affect the value of our assets and negatively affect our profitability
2. 10Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. Many of our assets pay a fixed rate of interest or provide a fixed preferential return35% rewritten
3. 11The lack of liquidity of our assets may adversely affect our business, including our ability to value our assets
4. 12Some of the assets in our Portfolio may be recorded at fair value and, as a result, there could be uncertainty as to the value of these assets. Further, we may experience a decline in the fair value of our assets
5. 13The preparation of our financial statements, including provision for loan losses, involves use of estimates, judgments and assumptions, and our financial statements may be materially affected if our estimates prove to be incorrect
6. 14We rely on our project sponsors for financial reporting related to our project companies, and our financial statements may be materially affected if the financial reporting related to our project companies proves to be incorrect
7. 15Our investments are subject to delinquency, foreclosure and loss, any or all of which could result in losses to us
8. 16The projects in which we invest may incur liabilities that rank equally with, or senior to, our investments in such projects
9. 17We invest in joint ventures and other similar arrangements that subject us to additional risks
10. 18Many of the projects in which we invest depend on revenues from third-party contractual arrangements, including PPAs, that expose the projects to various risks22% rewritten
11. 19We are exposed to the credit risk of various project sponsors, ESCOs, and others21% rewritten
12. 20The ability of our assets to generate revenue from certain projects depends on having interconnection arrangements and services30% rewritten
13. 21Generally, projects involving construction are subject to various construction and operating delays and risks that have in the past and may in the future cause higher than expected costs or less than expected amounts of savings or outputs (such as electricity in the case of a renewable energy project)New
14. 22Some of the projects in which we invest may require substantial operating or capital expenditures in the future
15. 23The use of real property rights that we acquire or are used for our climate solutions projects may be adversely affected by the rights of lienholders and leaseholders that are superior to those of the grantors of those real property rights to us
16. 24Performance of projects where we invest may be harmed by future labor disruptions and economically unfavorable collective bargaining agreements
17. 25We invest in projects that rely on third parties to manufacture quality products or provide reliable services in a timely manner and the failure of these third parties could cause project performance to be adversely affected
18. 26Liability relating to environmental matters may impact the value of properties that we may acquire or the properties underlying our assets35% rewritten
19. 27Insurance and contractual protections may not always cover lost revenue, increased expenses or liquidated damages payments
20. 28The repayment of certain of our assets is dependent upon collection of payments from residential customers and we may be indirectly subject to consumer protection laws and regulations

Risks Related to Our Company and Structure

1. 29Our business could be harmed if key personnel terminate their employment with us
2. 30Conflicts of interest could arise as a result of our structure
3. 31Our charter and bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price our common stock
4. 32However, our charter provides that federal district courts of the United States of America will be the sole and exclusive forum for claims under the Securities Act
5. 33Failure to qualify as a REIT for prior taxable years would subject us to U.S. federal income tax and potentially state and local tax
6. 34Our ability to utilize our NOLs and other carryforwards may be limited
7. 35We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility, and reduce the market price of shares of our stock
8. 36Our management and employees depend on information systems and system failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends to our stockholders
9. 37our originating, financing, investing, asset and financial management and reporting activities, which could have a material adverse effect on our operating results
10. 38Artificial intelligence could increase competitive, operational, legal and regulatory risks to our business in ways that we cannot predictNew
11. 39Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, a misappropriation of funds, and/or damage to our business relationships, all of which could negatively impact our financial results
12. 40We may seek to expand our business internationally, which would expose us to additional risks that we do not face in the United States. A failure to manage these additional risks could have an adverse effect on our business, financial condition and operating results76% rewritten

Risks Relating to Regulation

1. 41We cannot predict the unintended consequences and market distortions that may stem from far-ranging governmental intervention in the economic and financial system or from regulatory reform of the oversight of financial markets33% rewritten
2. 42Loss of our 1940 Act exemptions may adversely affect us, the market price of shares of our common stock and our ability to distribute dividends
3. 43Rapid changes in the values of our assets may make it more difficult for us to maintain our exemption from the 1940 Act

Risks Related to our Borrowings and Hedging

1. 44We use financial leverage in executing our business strategy, which may adversely affect the returns on our assets and may reduce cash available for distribution to our stockholders, as well as increase losses when economic conditions are unfavorable
2. 45We and our subsidiaries may be able to incur substantially more indebtedness, which may increase the risks to our financial condition and results of operations created by our indebtednessNew
3. 46An increase in our borrowing costs relative to the interest we receive on our assets may adversely affect our profitability and our cash available for distribution to our stockholders. Our borrowings may have a shorter duration than our assets
4. 47While we have an established Board-approved leverage limit, our Board may change our leverage limits without stockholder approval
5. 48The use of securitizations and special purpose entities exposes us to additional risks
6. 49Certain of our existing credit facilities and debt contain, and any future financing facilities may contain, covenants that restrict our operations and may inhibit our ability to grow our business and increase revenues
7. 50We, or the projects in which we invest, enter into hedging transactions that could expose us to contingent liabilities or additional credit risk in the future and adversely impact our financial condition
8. 51If we, or our projects, choose not to pursue, or fail to qualify for, hedge accounting treatment, our operating results under GAAP may be impacted because losses on the derivatives that we enter into may not be offset by a change in the fair value of the related hedged transaction33% rewritten

Risks Related to Our Common Stock

1. 52An active trading market for our common stock may not continue, which could cause our common stock to trade at a discount and make it difficult for holders of our common stock to sell their shares
2. 53Subject to applicable law, our Board, without stockholder approval, may authorize us to issue additional authorized and unissued shares of common stock and preferred stock on the terms and for the consideration it deems appropriate
3. 54We cannot guarantee the timing, amount, or payment of dividends on our common stock44% rewritten
4. 55Future offerings of debt or equity securities, which may rank senior to our common stock, may adversely affect the market price of our common stock